The pair finished the week lower as lawmakers in Greece struggled to form a coalition government which in turn raised concerns that the country may end up defaulting on its looming financial obligations. To add to the above stated concerns, the Troika have cancelled their May mission to Greece on the grounds of political instability endangering the rescue effort, while other reports indicated that that German coalition lawmakers are open to a Greek exit. Still, some tentatively positive remarks have emerged from the leader of New Democracy party Samaras, who has commented that the Democratic Left’s proposal of a national unity government is close to his party’s position. By the closing stages of trade on Friday the pair was trading firmly below the psychologically important 1.3000 level and the 1-month implied volatility was up c. 3.7% on the week indicating that the bearish momentum may carry through to the next week. In terms of technical levels, supports are seen at 1.2900, 1.2855 and then at 1.2839. On the other hand, resistance levels are seen at 1.3067 and then at the 10DMA line at 1.3070.
Decision by the MPC to keep the benchmark borrowing rate, as well as the Asset Purchase Facility (APF) unchanged was offset by weaker than expected UK related macro economic data, which as a result meant that the pair settled the week lower. This week saw the release of the latest BRC sales for the month of April, which was reported at -3.3% (which compares to 1.3% in March). Separately to this, the latest RICS house price balance report revealed that the rebound in the residential property market has run out of steam. The report also indicated that London was the only part of the UK where prices rose, albeit at the slowest rate since the mid-point of last year. A RICS spokesman has said economic concerns and a lack of availability of mortgage finance were the primary influences on the housing market. In terms of technical levels, supports are seen at 1.6039/09 and then at the 55DMA line at 1.5954. On the other hand, resistance levels are seen at 1.6143 and then at the 10DMA line at 1.6170.
The pair finished the week little changed, as the never-ending verbal intervention rhetoric by the BoJ was counteracted by risk averse trade flows which dominated the week amid the political discontent in Greece. Of note, Japanese vice finance minister said Japan could intervene in FX market if excessive speculation occurred. Separately to this, BoJ’s Shirai has said there is still a need to watch the global financial markets, including FX, as uncertainty remains. It is also worth noting that according to the BoJ minutes from their April 9-10th policy meeting, the ministry official at the meeting suggested that the BoJ should conduct policy decisively and promptly to achieve its inflation target.